Last night, Sony held a PR event in New York City to publicize the launch of the Sony PRS-700 reader. In a neat bit of symbolism, the launch was held at the Library Hotel, a "boutique" hotel in midtown Manhattan. (Room numbers use the Dewey Decimal system.) Sony's event took place in Bookmarks, a 14th floor rooftop bar. MR staffer Nate The Great was originally scheduled to cover the event, but ran into a last minute problem that required him to cancel. Alex Turcic remembered that I lived in NYC, and asked if I could substitute as MR's reporter at the event. Sure. I live in walking distance...

The presentation was given by Steve Haber, who is the head of the effort that produces the reader. The audience included Sony and E Ink representatives, members of the press, and representatives from publishers including Random House, Ballantine Books, Hachette Filipacchi, and HarperCollins. The actual presentation took about 20 minutes. The rest of the event was socializing with a Sony catered open bar. Technical details about the reader beyond what were presented in the Sony press release Nate already wrote about were scarce, but those will doubtless be forthcoming.

The most significant point for me about the event was that it occurred at all. One of the questions about the dedicated reader market was whether it was big enough for someone like Sony to address profitably. Sony is a very large corporation, and senior management has a fiduciary responsibility to the shareholders to invest corporate funds where they will get the best return. A company like Sony needs big numbers to justify an investment. Is the market for dedicated readers large enough for Sony to profitably address? It would appear that Sony thinks so.

Steve Haber, the event's host, is President of the Digital Reading Business Division. This is a newly created unit of Sony, who combined three other operations to create the unit. They also moved the operation from Japan to San Diego, so reader operations are now headquartered in the United States. Fujiyo Naguchi, who had run the Japanese operation, relocated to San Diego to work for Steve.

Steve spent most of his time talking about Sony's commitment to the effort, and the steps they were taking to nurture and grow the reader market. An assortment of things were revealed.

First, Sony does plan to introduce wireless capability in in a future model. But as he put it "It's all about being open!" The capability, when available, will not be tied to a particular provider or service. Sony seems to want reader owners to be able to get content from a variety of sources, and not be limited only to the Sony store. However, the Sony Connect site is getting an upgrade. By the end of the month, there should be a new design with better appearance, and an improved search function to help buyers find what they are looking for.

Second, Sony is aware that content is king. Steve stated that Sony had about 50,000 titles in the Sony store now, but "My people are all going to have heart attacks when I say this..." they are pushing hard to have 100,000 titles available for the reader by the holiday season.

Sony has also mounted several marketing initiatives to broaden the reader market.

They had already launched the reader in the US, then in the UK and Canada. Next month, as previously reported, they will launch in France.

In an interesting contrast with Amazon, Sony is partnering with brick and mortar retailers. Sony is already partnered with Borders and Target here in the US, and Waterstones in Britain. This year, they have 7,000 retail outlets. Next year, they hope to increase that to 30,000. One of the outstanding questions on eBooks is "where do they leave the retailer?" The book retailing industry is under immense pressure. There are increasingly few independent bookstores, as large chains like Barnes and Noble and Borders expand into new areas, offering pricing the independents can't match. And those chains are in turn under pressure from discount "warehouse" retailers like CostCo and Sam's Club (who also sell books, and are an important factor in the industry.) People normally buy eBooks over the web. As demand shifts to eBooks, booksellers in brick and mortar establishments get increasingly squeezed. They aren't the ones making the sale. By partnering with existing retailers, Sony gives them a stake in the process, and broadens the distribution channel for the reader.

To go along with this, Sony is launching a campaign called Reader Revolution. Representatives will be visiting retailers with demonstration units, to give customers hands-on experience with the reader. Steve commented that the majority of the market wasn't familiar with eBooks and readers, and the response to them was likely to be "Huh?". But put a reader in their hands, and show them, and recognition would set in. "Oh, yeah! That's pretty cool!"

Sony has a month long promotional effort taking place in NYC called ReadIn. A man named David Farrow will spend a month in a window at 39th and 5th Avenue. He'll have food and drink and and a Sony Reader, and will spend a month eating, drinking, sleeping, and reading on a Reader under the public eye. When he has to do things like go to the bathroom, he won't have to do that in public. Volunteers will sit in for him while he is otherwise engaged. Sony will donate eBooks to schools based on page turns and books read in their reader.

Sony is also reaching out to schools to be an eBook supplier, offering eBooks and eBook library management software. The first 100 schools to sign up for the Sony program will get five free Sony Readers as part of the offer.

There were ten demo units in the hands of Reader Revolution representatives. I played with one briefly. Screen refresh was pleasantly fast, taking about a quarter of a second for a page turn. The rep indicated that had been a focus of development efforts on the 700. The touch screen capabilities worked well, and you could turn pages by swiping the screen. What direction you swiped to move backward or forward was configurable, and you could chose left to right/right to left or bottom to top/top to bottom to page in the desired direction. You can also swipe and hold to page forward or backward more than one page at a time.

The reader offers front lighting on the screen border, to handle the case where you wish to read in a dark room at night.

And what may be the most significant upgrade from my viewpoint was a note taking utility. You could highlight a range of text with your finger or included stylus, and attach a note to it using an on-screen keyboard, or you could attach a note to a bookmark. At the moment, notes are tied to text selections of bookmarks, and aren't available independently. The touch screen also means another reader complaint is addressed. Other readers let you highlight a word and get a dictionary definition. With onscreen highlighting by finger or stylus, it now becomes possible to have a dictionary look up function on the PRS-700. (I don't know at the moment if dictionaries that can be used that way are available.)

The fact that the Notes capability exists leaves room for expansion down the road. It wasn't mentioned in the presentation, but an onscreen keyboard coupled with wifi has obvious possibilities.

I had a chance to talk a bit with Steve after the presentation. One question I asked was about color support. He indicated it was being looked at, but would not be a near term happening. I also asked about actual unit sales. Steve said he didn't know exact numbers, which I could believe. Sony is selling through retailers as well as direct, and shipments to retailers are not the same thing as sales to consumers. He did state they were seeing significant interest and demand. He talked about unit sales in vague terms. I hope to get more details from him in the near future, plus answers to a couple of questions I didn't think to ask at the time. He's traveling back to San Diego as we speak, but mentioned a possible call on Monday to clarify things we talked about and answer questions.

I also spent some time talking to Christian Smythe. Chris is Director of eBooks Merchandising for Sony Software and Media Services, and the man responsible for getting content for the reader. Chris made it clear Sony is well aware that more content is required to compete with the Kindle, and they are pushing hard to get it. He is also ware that pricing is a concern, and talked about their general $11.99 price on titles. We chatted a bit about pricing strategies, and my observation that most folks didn't see why a an ebook should cost more than a comparable mass market paperback. Chris asked me to follow up with him in email. so we'll be talking some more. I hope to do a formal interview with him for MobileRead about his job and Sony's efforts in the market.

The other contact of the evening was Sriram Peruvemba, VP of Marketing for E Ink. Sriram got involved when I asked Steve about the supply chain, and whether there were constraints on reader growth due to limitations in the supply of E Ink screens. Steve and Sriram told me that PVI is no longer the sole source for eInk displays. Other manufacturers, like LG, have licensed the technology and are gearing up to produce displays. Steve said "I have a lot of worries, but supply of eInk displays isn't one of them!" Sriram mentioned a manufacturer who had bought the production facilities of another which had gone Chapter 11, and confirmed that plenty of production capacity existed. I'll be contacting him shortly to get more information on E Ink's partners and future plans.

As I mentioned, the most important fact to emerge from the presentation was Sony's ongoing commitment to the Reader. They see a large market, and are moving aggressively to serve it. Their moves thus far are evidence of a strong commitment.

I've attached reduced size photos from the event to this post. Folks interested in the full size versions can look at the set on Flickr
______Dennis

Sony is a very large corporation, and senior management has a fiduciary responsibility to the shareholders to invest corporate funds where they will get the best return.

Sorry but why does the size of a company have to do anything with profitably requires? If you can estimate an investment of X to have say 20% profit on investment return, its good, big company or startup company.

One can point out that bigger companies don't worry about smaller X, that is smaller oppurtinieties to make out of not so much money +20%. Because they got more paperwork to do, as when a smaller company takes an opportunity of smaller volume. But the profit margin itself it really IMHO does not matter how big the company is.

Not that I would like any hint of readers to be fruitfull markets and not that I actually believe they are. But this argument above presented here as "main argument" is IMHO just a logic fallacy.

Thanks, Dennis, that's a great report and really interesting. Intriguing that Sony are bringing bricks-and-mortar bookstores on board; but what is the future for them if ebooks go mainstream, as it seems they are already beginning to do?

Thanks, Dennis, that's a great report and really interesting. Intriguing that Sony are bringing bricks-and-mortar bookstores on board; but what is the future for them if ebooks go mainstream, as it seems they are already beginning to do?

I think the right answer is to allow Brick and mortar stores to sell eBooks. I know Target and Borders both want an ongoing relationship, not a one time buy. I think that a Kiosk center in these stores in the right answer with a connection back to Sony. You could drop by with your reader or perhaps an SD card and browse the store and then buy via the Kiosk. Why wouldn't that work?

I think the right answer is to allow Brick and mortar stores to sell eBooks. I know Target and Borders both want an ongoing relationship, not a one time buy. I think that a Kiosk center in these stores in the right answer with a connection back to Sony. You could drop by with your reader or perhaps an SD card and browse the store and then buy via the Kiosk. Why wouldn't that work?

That's a question I plan to ask in my followups with Steve and Christian. I suspect it has occurred to them, but didn't get a chance to find out.
______Dennis

Thanks, Dennis, that's a great report and really interesting. Intriguing that Sony are bringing bricks-and-mortar bookstores on board; but what is the future for them if ebooks go mainstream, as it seems they are already beginning to do?

That's a good question. Get the brick-and-mortar folks involved in the distribution effort is only a first step. People need to be able to purchase ebooks at the same time that they purchase paper books. I'm reasonably sure Sony has thought of that, but don't yet know what their plans are.
______Dennis

That's a good question. Get the brick-and-mortar folks involved in the distribution effort is only a first step. People need to be able to purchase ebooks at the same time that they purchase paper books. I'm reasonably sure Sony has thought of that, but don't yet know what their plans are.
______Dennis

Indeed.

I wonder if Sony could develop a Point of Sale system which would allow people to buy and load ebooks in the store itself.

Here in the UK, I talked to quiet a few Waterstone's employees who wished it was possible, as many of their customers were not very comfortable with the process of getting book's on the reader. Especially when you add the double dose with Abobe DE as well as the Library.

A system like this would probably be easier with Mobi or Ereader where you don't need to authorise the machine to load book's onto a device, but surely Sony could make a special version of Library, etc to allow stores to do so. Maybe tie it to a smart card or something so customers could easily buy books from different locations without having to enter detaile in each place again and again.

Sorry but why does the size of a company have to do anything with profitably requires? If you can estimate an investment of X to have say 20% profit on investment return, its good, big company or startup company.

Nope. The bigger you are, the bigger X needs to be, and the bigger the return needs to be.

Consider the Sony Clie PDA line. It was popular and well received. It was profitable. It was killed because it wasn't profitable enough. Sony senior management looked at the investment required and the return, and concluded they could get more bang for their buck investing the funds in other areas.

Businesses enter and leave lines of business all the time based on such imperatives. Senior management is fundamentally an investment committee. They are responsible for Other People's Money, and their focus will be where it can be invested for the greatest return. (General Electric was known for buying and selling entire large companies to produce the steady revenue and profit stream the market expected.)

When you are a division of a company, you not only have your own expenses to consider. You also bear a share of the overall corporate overhead to which you must contribute. This means a smaller company with less overhead can exist on sales and profits that would be deadly to a larger one.

A smaller company like Bookeen or iRex will exist happily on sales that would not be adequate for Sony. Sony makes and sells devices, and they need to make and sell a lot of devices to make it worth their while to do it.

Semiconductor electronics is the classic capital intensive business. There are huge upfront costs in creating the capability to make the products. The biggest portion of the cost of a unit will be the overhead of the financing required to make it. The more you can make, the more you can spread the overhead, and the lower your units costs, and higher your profit on each unit will be.

Nope. The bigger you are, the bigger X needs to be, and the bigger the return needs to be.

As said, the first conlcusion is correct, the second is IMHO not.

Of course every company wants to make as much profit as possible. Its just not correct that the larger the company is, the more profit it must do per dollar invested.

Quote:

(General Electric was known for buying and selling entire large companies to produce the steady revenue and profit stream the market expected.)

General Electric... ooook..... The whole fusioning and splitting job is btw. a product that diffrent sizes companies are differently rated at the stock market. So you can make money buy merging or splitting companies. You can watch "bodyguard" to see richard gere doing this as job

Quote:

Semiconductor electronics is the classic capital intensive business. There are huge upfront costs in creating the capability to make the products. The biggest portion of the cost of a unit will be the overhead of the financing required to make it. The more you can make, the more you can spread the overhead, and the lower your units costs, and higher your profit on each unit will be.

This is Finance 101.

thanks for explaining me financing 101, we'll I actually did that much financing already. What you descrive is total return on investment. Yes ROI will increase the larger the production is. "economies of scale". However I still disagree that larger companies have a larger ROI than smaller. This is just not true.

As long any investment (including management expenses) has a larger ROI than the market interest loan any company will want to do that, big or small. Since it can get the investment needed from the finance market.

I wonder if Sony could develop a Point of Sale system which would allow people to buy and load ebooks in the store itself.

I can think of a couple of ways to do it.

Once wifi is available on the device, it's simple -- the customer connects to an instore wifi hotspot and downloads. Selections can be made from a list at a kiosk, and paid for by credit card. Once the charges are authorized, the customer connects via wifi and downloads the purchases.

For devices without wifi, the solution might be a kiosk for selection, with books copied to an SD card dispensed by the kiosk.

I go in to browse (because for a book lover there is nothing like the joy of spending time in a bookstore)...and as I wander around I see various interesting-looking offerings. I read the insider covers, maybe I read a few pages, and I decide which books I want. Right there on the shelf is some indication that the ebook is available, and I either swipe my credit card, or take a bit of paper with the scanner code, or whatever.

When I'm done choosing, I go to the register, hand the cashier my credit card AND my ebook reader, and the books are loaded onto it.

Well, in other words, I guess it works a bit like Amazon...but (I am sorry Amazon, I love you but this is a big BUT) they simply cannot duplicate the shelf full of colorful spines facing me, with the titles, the authors, and the chance to open the book to a page and random and start to read. Bookstores are special places!